Cotton mixed on forecast for less planted area

General Comments: Futures were mixed as traders saw USDA forecast less planted area for the U.S. this year. Ideas are that the reports indicate the possibility of tight supplies in the U.S. by the end of the next marketing year. There were also reports of increased mill interest for Cotton here in the U.S. due in part to the positive U.S. economic data that was released this week. Demand ideas remain strong overall based on the strong export paces seen in the USDA reports in recent weeks and on reports of tight domestic and world cash markets. Demand is still said to be strong, and sales for export have held up well given the price strength in recent weeks. Some producers in the Delta are noting the recent price rally and might decide to plant more Cotton this year.

Overnight News: The Delta and Southeast will see mostly dry weather until a few showers appear over the middle of the week in southern areas. Temperatures will average below normal. Texas will get dry weather except for a few showers tomorrow. Temperatures will average below normal early this week and near to above normal by Friday. The USDA spot price is now 83.29 ct/lb. ICE said that certified Cotton stocks are now 0.418 million bales, from 0.418 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 87.40, 86.20, and 85.60 May, with resistance of 89.10, 89.80, and 90.45 May.

FCOJ

General Comments: Futures closed a little lower in very quiet trading. Prices acted weak and it seems as if the market has priced in crop losses for now. Greening disease and what it might mean to production prospects continues to be a primary support item. Forecasts calling for colder temperatures through the end of the month provided some buying interest. Temperatures are warm in the state, and conditions are dry, and talk about the potential for more fruit drop and poor development of the crop for next year continues. Harvest in Florida of mid and early oranges is over, and the Valencia harvest is continuing. Bloom has been reported in groves in all production areas of the state. Brazil is seeing near to above normal temperatures and scattered showers. Drier weather is expected this weekend.

Overnight News: Florida weather forecasts call for mostly dry conditions, but some precipitation is likely on Thursday. Temperatures will average near to above normal.

Chart Trends: Trends in FCOJ are mixed. Support is at 134.00, 132.00, and 124.00 May, with resistance at 139.00, 140.00, and 141.00 May.

About the Author

Jack Scovilleis a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

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